You missed the thrust of my argument. There’s lots to discuss about the Warren proposal.
But to dismiss it as crazy or absurd is ignorant. Because there are examples of this sort of governance in other countries and in the US. To be sure, this ignorance is not unusual in the US. But conservative attacks on this proposal by Warren deserve mockery.
The German experience doesn’t necessarily carry over to the US? Sure, I’ll buy that. In reality, there are many types of mixed market economies in the world. Sweden has lots of government spending and strict cutoffs for welfare payments to the unemployed. Germany’s system is centered on banks; Japan’s before 1989 was centered on big conglomerates (still is, albeit to a lesser extent). The US is driven by the stock market. None of that was planned by the way: the US system was shaped by state regulation of insurance companies (which limited their influence) and state/federal regulation of banks (ditto).
Back to the OP. You can interpret Warren’s proposal on its merits, but in reality it’s an opening bid. We have some pretty pronounced problems in US corporate governance; Warren’s proposal and a milder version of it (which is more likely to be passed) deserve debate. But the first step is to address arguments that are a) common among conservatives and b) really stupid. Then the adults can talk.
A lot of people think it’s wrong that virtually none of the companies or individuals responsible for the Great Recession had any sort of criminal penalty (jail, fines, etc). Most of them didn’t even lose their jobs.
Edited to add that her proposal is one idea to prevent that from happening in the future. Someone who uses a gun to steal $2,000 from a bank goes to jail for a good long time, while a banker can steal a lot more without being charged with anything.
Bad argument: Look at Vanguard and Germany. Conclude: Warren’s proposal is great!
Actual argument: ruling out Warren’s proposal as not reflecting the realities of capitalism is ignorant of the empirical realities of capitalism. I gave counterexamples. There are many others. This ignorance, compounded by a lack of self-knowledge, is fairly typical in US conservative discussion. I gave a citation.
If you think it’s absurd because you think the economy will collapse if it’s implemented then the example of other countries would suggest that this is not correct.
But if you think it’s absurd because you think it’s morally wrong to grant (partial) control of people’s property to other people, then the fact that any number of other countries are doing this has no real bearing.
Ok, then you think that tweaking the rules on corporate governance of publicly traded limited liability companies is… morally absurd.
I say that if folks want to set up their own companies and profit from them, no problem. But if they want the benefits of limited liability, then they are going to have to play by public rules. I agree that companies should have the option of transforming themselves into partnerships, whereby stockholders can take on unlimited liability for the corporation’s decisions. Good luck with that. News flash: property institutions didn’t just spring from Zeus’s head fully armed. They are the result of policy decisions. Property has never ever been unregulated, nor has it ever been free of governmental encumbrance of one type or another.
Warren’s proposal does not reflect the realities of American capitalism. This is an important point because it is the only type of capitalism we have in America. American capitalism is about big young companies that grow fast and generate great returns. America has 19 companies that are bigger than Germany’s largest company, Volkswagen. Of Germany’s 10 largest company only one was created in the last 50 years. The price to earning ratio of the German stock market is 25% lower than in the US. Germany’s economy is about old firms that are well managed and grow slowly. Their economy’s strengths are an educated, law abiding populace that excels at craftmanship.
Adopting rules such as Warren’s would hurt what is strongest in America’s economy, young dynamic companies that create huge value is short amounts of time, while doing nothing to replace it with Germany’s strengths. We would get Germany’s weaknesses and American weaknesses. What would we get in return? Not insulation from malfeasance as the Siemens bribery scandal, or Volkswagen’s falsifying emissions shows, in the book the Big Short the term Dusseldorf was used by traders as shorthand for the dumb money buying all the subprime loans.
I get the impression that some people think that labor unions and corporations are equivalent in power somehow. I doubt that. I suspect that corporations are vastly more powerful in America today than the few labor unions left. For one thing, only one in ten employees is in a labor union. Even among public-sector workers, only one in three is.
It depends on how you define power, but I tend to think of labor unions as vastly more powerful than corporations.
Where corporations have a lot more power is on matters pertaining to themselves specifically, and mostly at a local level. Meaning, they’re very good at getting local governments to give them massive tax breaks and so on - things which benefit this specific corporation but don’t do anything for corporations as a group.
By contrast, unions don’t tend to have interests that are specific to themselves. (The exception is big public service unions, who are generally don’t face corporate opposition.) Their efforts are geared towards things which benefit unions as a group, most specifically laws and regulations which enhance union power. Corporate efforts to oppose these things are relatively half-hearted - the Chamber of Commerce will tend to be prominent in opposition, but the COC is not the full weight of corporate power, and most corporations will be busy lobbying politicians for far narrower issues that are of interest to their company specifically or perhaps a few peers. So unions have the edge.
In addition, while corporations have money to spend, unions have money and membership, which is a more powerful force.
When 1/10 members of a workforce are union, your union is, other than as a lobbying force, essentially neutered. A strike won’t actually do anything, which leaves the union basically no power. The union can lobby… But in terms of spending, every labor union in the country (unions which speak for tens of millions of people) spends a total of four times as much as… two people. Not “all companies”, not “all billionaires”, just two people. Businesses? Blows 'em out of the water:
All business sectors combined to spend at least $9.5 billion to influence politicians at the federal and state levels in the 2012 election cycle, including campaign contributions and lobbying. Labor unions spent $600 million.
So once striking loses its bite (which, for the vast majority of corporations, it has) the argument that the unions are more powerful than the corporations is just bizarre.
It’s not that 1/10 members of a workforce are union, but that one in ten workers in the US are members of unions. And that percentage is inflated by the larger number of public-sector employees in unions. Only 6.5% of private sector employees are unionized.
If unions were more powerful than corporations, their influence wouldn’t have been shrinking for the last 40 years.
The fact that corporations are built to advance shareholder interests, and only shareholder interests makes them amoral actors. Absent an outside controlling force, corporations will do (and have done) absolutely horrible things, from abusing/endangering/killing workers to poisoning water and air.
The question is what sort of controls make sense to appropriately direct the power of the corporation to create positive economic value for society, rather than just for the owners. Because, the point of the legal construct of a corporation is NOT to make owners rich, but to make the whole of the economy better off.
What you wrote is baseless and kinda silly. What do you call right-to-work laws if not corporations, as a group, flexing their muscles against unions? Many corporate initiatives benefit all corporations.
I don’t know how much you thought this through. Right-to-work laws apply in about half the country. So if your argument is that corporations have far power than unions, you’re going to have to say there were other factors involved WRT this.
Going off MBA classes that were 20-some years ago…Corporations exist to advance shareholder interests and to limit their liability. The laws concerning them are about those things in one way or another, for the most part, though there are also lots of laws/rules/regulations surrounding their taxation. I don’t remember ever hearing about them existing to “make the whole economy better off.”